Oil price continues to trade with a soft tone today amid concern oil demand outlook. Although the market speculated the US rescue plan will offer some help to the economy, the effectiveness remains uncertain. Although Iraq oil minister said last week that OPEC will likely cut production again in March, the news failed to excite investors as the pace of consumption deterioration is expected to be much faster than output cuts.

Crude oil price has slumped by more than $100/bbl since its 147.27 peak in July 2008. Decline in price, production cuts as well as delay in projects have hurt revenues of oil exporting countries in Middle East and Africa severely. According to IMF, economic growth in Saudi Arabia, Kuwait, UAE, Qatar and Bahrain will be reduced to 3.5% in 2009 from 6.8% a year ago while CPI, on average will drop to 6.3%.

Stock markets retreated in Asia and Europe. The MSCI Asia Pacific Index lost 0.3% and Japan's Nikkei 225 Stock Average slid 1.3% as led by the financial sector. Nomura dropped 14% after the largest brokerage house n Japan said it may sell stock valued at 300B yen from Feb 19. In European morning, UK's FTSE 100 Index lost 0.8% amid worries that the US' package may be delayed.

Gold price's intraday decline intensified in European morning and the benchmark contract tumbled below 900 before rebounding to 902. We view any pullback of gold price as a buying opportunity to benefit from the inflationary environment in the long term.

In January, US' M1 money supply rose 20% yoy after the rollout of US$800B bailout plan. Money supplies in other countries are also burgeoning. Investors need to store the value of their capitals and gold and other precious metals are good alternatives.